The same assessment was used at 20 weeks, when nine correct words was sufficient.
The report said 27% of the children who sat the 40-week check in Term 4 last year needed extra support.
The checks were used by some schools last year and became mandatory for all primary schools this year.
The ministry’s report said phonics involved teaching students the relationships between letters and sounds.
“Phonics ability in the first year of schooling is predictive of reading proficiency in later year levels of school,” it said.
Canterbury University education professor Gail Gillon said the figures needed to improve, especially the number of students needing support.
“The percentage of children from this data showing that they still need more support is still high. It’s certainly better than it’s been in the past if we look back to national standards data,” she said.
“We still need to focus on reducing the number that need more support at the end of their first year at school, and that will come about by really targeted interventions in their first year at school, and that’s starting to happen.”
Gillon, who founded the Better Start Literacy Approach used in many schools, said she expected the results would improve as more teachers became accustomed to now-mandatory structured literacy teaching methods.
But she warned against over-emphasis on phonics teaching.
“This is absolutely the right approach that we are monitoring these skills, but we don’t want to make that the only approach,” Gillon said.
“We’ve got to be careful that we’re also monitoring their oral language development and listening comprehension skills that really underpin reading comprehension as well as, of course, their spelling skills.”
The ministry’s report showed lower achievement rates for cohorts of children who sat the 40-week assessment earlier in the year – 35% in Term 3, 29% in Term 2 and 26% in Term 1, with an average for all four cohorts of 39%.
The report was based on 20,096 20-week and 40-week check results for 16,896 students, representing 28% of the 2025 cohort of Year 1 students.
The ministry said the data provided the clearest picture yet of Year 1 student phonics learning.
“This data supports our understanding of student progress and achievement in this critical skill, so we can better resource schools and teachers across the country to help lift achievement,” it said.
“These results underscore the importance of identifying students who need additional support ... with phonics as early as possible, so they can receive targeted assistance to stay on track with their literacy learning.”
The ministry said the experiences of other jurisdictions showed strong gains could be made from similar starting points.
“In New Zealand, we anticipate similar gains over time as new curriculum initiatives and structured literacy approaches are embedded.”